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    Piramal Enterprises, GMR, JSPL among companies that applied for RBI moratorium

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    Piramal Enterprises, GMR, JSPL among companies that applied for RBI moratorium

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    Credit rating agency ICRA has released a list of 328 companies among its rated universe that opted for the moratorium provided by lending institutions

    Credit rating agency ICRA has released a list of 328 companies among its rated universe that opted for the moratorium provided by lending institutions as mandated by the Reserve Bank of India on March 27.
    Some of the big names that opted for the moratorium include Centrum Financial Services, Credit Access Grameen, GMR, Hindustan Copper, Indostar Capital, Jindal Power, JSPL, JSW Steel, Kalyan Jewellers, Lemon Tree Hotels, Minda Industries, Parag Milk Foods, Piramal Enterprises and Tata Power Company.
    The Reserve Bank of India has permitted all financial institutions to allow a three-month moratorium to their borrowers, for both term loans and working capital loans.
    Under these relief measures for COVID-19 impacted borrowers, RBI had also said that non-repayment of loans and instalments for such borrowers would not result in an asset classification downgrade between March 1 and May 31, but as a prudent measure keeping the financial health of banks in mind, it had also asked banks to set aside an additional ten percent provisioning for accounts which were in default but standard, and were being given the benefit of this moratorium/deferment. This provision can be written back at the end of the year, if the account remains standard, and regular with repayments.
    The borrowers seeking this benefit would have to pay additional interest accrued over this three month moratorium period, so the cost of borrowing would go up for these companies. For their lenders as well, provisioning will jump up from 0.40 percent otherwise to 10 percent, if such accounts had over dues of anywhere between 1 and 89 days when the moratorium was applied.
    "Missed payment by these entities even in the case of pending formal approval from the Lending Institutions prior to the original due date, is not considered an instance of Default. Non-recognition of default in these cases is as per the guidance provided by the aforesaid SEBI circular," ICRA said.
    "However, it may be noted that for the entities that are yet to receive an approval for the moratorium from their Lending Institutions, if the same is not received in due course, ICRA would review its stance on default recognition. "
    Below is the press release issued by ICRA, which contains the list.
     
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